Employees will no longer have to complete five years of service to receive gratuity. Under the new rule, gratuity will now be paid after just one year.
Earlier, gratuity was given only to employees who completed five years of continuous service.
This major change will directly benefit millions of contract and project-based workers.
The central government has relaxed the gratuity conditions for fixed-term employees (FTEs).
Previously, they also needed five years of service, but under the new labor laws, they can now receive gratuity after completing just one year.
This change is especially helpful for workers in project-based or limited-period jobs.
Who Are Fixed-Term Employees?
Fixed-term employees are those hired for a specific job, project, or time period. Their employment starts and ends based on a contract with a defined duration.
Once the contract period ends, the employment ends automatically unless the company decides to extend it.
Under the old rules, fixed-term employees rarely qualified for gratuity because most left before completing five years.
Now, with the new labor laws, they will be eligible for gratuity after just one year of service.
Details of the New Labor Laws
The government has combined 29 separate labor laws into four major labor codes.
These new rules provide contract workers with the same rights as permanent employees, including working hours, holidays, and wages.
Employers must also offer health benefits and social security, such as PF and ESIC, to contract workers.
Additionally, companies will provide free health checkups to employees above 40 years of age.
Benefits for Gig and Platform Workers
For the first time, the new labor codes define gig and platform workers—such as delivery partners and drivers working with Zomato, Swiggy, Uber, and Ola.
Aggregator companies will now contribute 1–2% of their annual income to a social security fund. This fund will be used for the safety and welfare of gig and platform workers.
